Risk, Stops and Position Size
The only part of a trade you control. Everything else on this track is an opinion; this is arithmetic.
You cannot make the market do anything. You can decide how much a wrong answer costs. That decision — not the entry — is what separates people who are still trading in five years from people who are not.
The order of operations
- 1
Place the stop first
At the price that proves the idea wrong — beyond the zone, beyond the swing low, past the level the structure depends on. Not at a round number, and not at the amount you feel like losing. - 2
Fix the risk per trade
A small, constant share of the account on every trade. Constant is the important word. - 3
Let the size fall out of the arithmetic
Risk divided by stop distance gives the size. A wide stop means a small position, not a bigger risk. - 4
Decide the target before you enter
If the obvious target is closer than the stop, the setup is not worth taking, however good the story sounds.
Gold-specific things that catch people out
Gold moves in fast, wide steps around news. A stop that is comfortable in a quiet session is inside the noise during an FOMC release. Either widen the stop and shrink the size, or do not have a position across a scheduled release.
When it fails
Risk rules fail the moment you make an exception — moving a stop away from price "just this once", or doubling size because the last three trades won. The rule is not the arithmetic; the rule is that the arithmetic does not get overridden.
Back to the forces behind the moves
Charts tell you where you are wrong. The forces lesson tells you why the market is moving at all.